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3.1.3 Invalidity Service Pension
Last amended: 1 July 2013
VEA ?
Eligibility criteria
A person is eligible for invalidity service pension if the person:
- is a veteran, More ?
- has rendered qualifying service, More ?
- is permanently incapacitated for work, and More ?
- meets the additional residency requirement, if a Commonwealth veteran, allied veteran or allied mariner. More ?
Note: The veteran does not need to be pension age and the incapacity does not need to be related to their service.
The eligibility criteria for invalidity service pension were amended effective from 1 January 2000. Eligible veterans who were in payment immediately prior to this date retain their eligibility under the old criteria (85% permanent incapacity). This savings provision is provided for in the Veterans' Affairs Legislation (Permanent Incapacity – Transitional) Regulations 1999 No. 358.
Lodging a claim
Although a person may meet the eligibility criteria for invalidity service pension, such a person will not be granted invalidity service pension unless they lodge a proper claim.
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A veteran may not claim invalidity service pension if the veteran has reached age 65.
Payability
There are a number of situations where a person may be eligible for invalidity service pension, but not payable. For example:
- the person is receiving another income support payment, or
- the rate of pension is nil. More ?
War widows/widowers paid invalidity service pension
A war widow or war widower who is also a veteran, may be paid invalidity service pension if they meet the eligibility criteria. However, the rate of that pension may be limited to a ceiling.
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Taxation
Invalidity service pension is not subject to income tax when paid to a pensioner who is under age pension age. When an invalidity service pensioner reaches age pension age, the pension becomes taxable.
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Invalidity service pensioners participating in the Veterans' Vocational Rehabilitation Scheme (VVRS)
VEA ?
VVRS assists invalidity service pensioners and other eligible veterans to find, or continue in, suitable paid employment. Whilst participating in VVRS, invalidity service pensioners receive the income protection benefits of the scheme and retain section 37 invalidity service pension eligibility.
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Compensation recovery provisions may apply
If the pensioner receives (or is eligible to receive) compensation payments for economic loss, such as incapacity payments, the compensation recovery rules may apply. Compensation recovery will reduce ongoing invalidity service pension payability or, if a lump sum compensation payment is received, will prevent payment of invalidity service pension for a calculated period of time known as the lump sum preclusion period.
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MRCA payments and invalidity service pension
Former members who are eligible for Special Rate Disability Pension (SRDP) under the MRCA are taken to satisfy the permanent incapacity for work eligibility test for invalidity service pension. SRDP is an ongoing payment that can be made to a former member in lieu of incapacity payments. The maximum weekly amount of SRDP under the MRCA is one half of the fortnightly rate of Special Rate pension under the VEA.
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SRDP is exempt from the income test when assessing whether invalidity service pension may be payable. In contrast, incapacity payments paid under the MRCA are regarded as assessable income.
Special Rate Disability Pension offsets and assessment of Commonwealth superannuation as income
VEA ?
SRDP payments under MRCA are offset to the extent that permanent impairment payments have already been made to the pensioner under the VEA, SRCA or MRCA. Where Commonwealth superannuation is also received, then the remaining SRDP payment is further offset at 60 cents in the dollar. The amount of superannuation that is applied to offset the SRDP payment (to nil payment, but not below nil rate) at the offset rate of 60 cents in the dollar is not assessable as income, for invalidity service pension purposes. Any remaining superannuation after the offset calculation is applied is assessable as income. An example calculation is included in the MRCA Policy Manual, at Chapter 13.8 Invalidity Service Pension.
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The offset Commonwealth superannuation amount is known as the Special Rate Disability Pension reduction amount
It is not assessed as it is an excluded income amount for VEA income support purposes.
Excel spreadsheet for calculation purposes
An Excel spreadsheet which assists in calculating the SRDP Commonwealth Superannuation Corporation (CSC) reduction, to determine the assessable and excluded amounts of Commonwealth superannuation for income support purposes, is available on the Income Support Intranet web-page.
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Restrictions on dual pensions
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Restrictions exist on the payment of dual pensions.
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Transfer from invalidity service pension to age service pension
An invalidity service pensioner may transfer to age service pension where the age requirement is met, and where the test of being permanently incapacitated for work is no longer satisfied. Transferring between invalidity service pension and age service pension may be initiated by a pensioner providing medical evidence of fitness to work, or where there is evidence that the veteran has commenced working for periods adding up to more than 8 hours per week.
Legislation Library
Veterans' Vocational Rehabilitation Scheme - Operational Guidelines
Calculating the SRDP Commonwealth Superannuation Corporation (CSC) reduction amounts - TRIM reference 11185018E
http://sharepoint/servingourcustomers/incomesupport/Documents/BL_DI/2011-2012/11185018E.tr5
For the purposes of Part VI of the VEA, a reference to a veteran is taken to be a reference to:
- a veteran as defined in subsection 5C(1) of the VEA;
- a member of the Forces as defined in subsection 68(1) of the VEA; or
- a member of a Peacekeeping Force as defined in subsection 68(1) of the VEA.
For the purposes of Part VII of the VEA, according to subsection 5C(1), veteran means a person (including a deceased person):
- who is taken to have rendered eligible war service, or
- in respect of whom a pension is, or pensions are, payable under subsection 13(6) and
- in Part III and Part VIIC of the VEA includes a person who is:
- a Commonwealth veteran, or
- an allied veteran, or
- an allied mariner.
Qualifying service is one of the criteria used to determine eligibility for certain benefits under the Veterans' Entitlements Act 1986. Refer to section 7A of the VEA for the full defintion.
Permanent incapacity has two meanings depending on the context: (i) and (ii).
(i) for the purpose of invalidity service pension
pre 1/1/2000
The test of permanent incapacity for invalidity service pension changed with effect from 1/1/2000. Prior to this date, a person was considered to be permanently incapacitated for work if the:
- person was permanently blinded in both eyes, or
- degree of permanent incapacity was 85% or more.
This prior test of permanent incapacity continues to apply (is saved) for persons who were receiving (or who had claimed) the invalidity payment prior to 1/1/2000.
post 1/1/2000
A person claiming service pension is permanently incapacitated for work for paragraph 37(1) (c) of the if the person:
- is permanently blind in both eyes, or
- is a veteran to whom section 24 of the VEA applies, or
- satisfies the subsection below.
A person satisfies this subsection if:
- the person has an impairment that, if it were an injury or disease for GARP, would result in a combined impairment rating of 40 or more under Table 18.1 in that Guide, and solely because of the impairment, the person is permanently unable to do work for periods adding up to more than 8 hours per week, and
- the Commission is satisfied that the impairment is permanent.
(ii) for the purpose of invalidity ISS
pre 1/1/2000
The test of permanent incapacity for invalidity ISS changed with effect from 1/1/2000. Prior to this date, a person was considered to be permanently incapacitated for work if the:
- person was permanently blinded in both eyes, or
- degree of permanent incapacity was 85% or more.
This prior test of permanent incapacity continues to apply (is saved) for persons who were receiving (or who had claimed) the invalidity payment prior to 1/1/2000.
post 1/1/2000
A person claiming ISS is permanently incapacitated for work if:
- the person is blind in both eyes, or
- the person has a physical intellectual or psychiatric impairment that results in 20 points or more under the Impairment Tables in Schedule 1B of the Social Security Act 1991, and
- the Commission is satisfied that solely because of the impairment, the person cannot work for at least 30 hours a week for the following 2 years.
A Commonwealth veteran is a person who served on a continuous full time basis in the defence forces of a Commonwealth country during a period of hostilities. Refer to subsection 5C(1) of the VEA for the full definition.
An allied veteran means a person who:
- has been appointed or enlisted as a member of the defence force established by an allied country; and
- has rendered continuous full-time service as such a member during a period of hostilities
An allied veteran does not include a person who has served at any time:
- in the forces of a country that was, at the time, at war with Australia, or in forces engaged in supporting or assisting the forces of such a country, or
- in the forces that were, at the time, engaged in war like operations against the Naval, Military or Air Forces of Australia
See section 5c(1) VEA
Currently, the pension age for a veteran is 60 years of age (VEA 5QA).
The pension age for a non-veteran is determined by the table below:
Date of birth (both dates inclusive) | Age Pension age |
1 July 1952 to 31 December 1953 | 65 years and 6 months |
1 January 1954 to 30 June 1955 | 66 years |
1 July 1955 to 31 December 1956 | 66 years and 6 months |
On or after 1 January 1957 | 67 years |
To be a proper claim, the claim must be:
- made in writing;
- in accordance with a form approved by the Commission; and
- accompanied by any evidence available to the claimant that the claimant considers may be relevant to the claim
A war widow/widower is generally a person who immediately before their partners death, was the partner of, or was legally married to:
- a veteran; or
- a person who was a member of the forces; and
- who is receiving:
- a war widow's/widower's pension; or
- a pension that is payable under the law of a foreign country that is, in the opinion of the Commission, similar to a war widow's/widower's pension.
Refer to 5E(1) of the VEA for the full definition.
Age Pension Age refers to pension age as defined under the Social Security Act 1991, that is, pension age for people other than veterans.
Age Pension Age refers to pension age as defined under the Social Security Act 1991, that is, pension age for people other than veterans.
The Veterans' Vocational Rehabilitation Scheme (VVRS) was established in December 1997 to assist eligible veterans to find, or continue in, suitable paid employment, with particular emphasis on:
- facilitating the transition from service in the ADF to suitable paid employment;
- assisting those veterans whose jobs are in jeopardy to retain suitable paid employment; and
- in conjunction with Part VIA of the VEA, provide an income safety net for certain veterans in receipt of pensions under sections 23 or 24 of the Act, or invalidity service pension, who wish to engage in suitable paid employment.
Participation in the scheme is voluntary and there are no penalties for withdrawal from, or failure to complete, an approved program. DVA will engage a VVRS contracted service provider that will assign a rehabilitation case manager to oversee the rehabilitation process for the Department. The VVRS contracted Case Manager will undertake a full rehabilitation assessment which will identify the client's vocational needs.